Assume that the banking system is loaned up and that any open-market purchase by the Fed directly
Fantastic news! We've Found the answer you've been seeking!
Question:
Assume that the banking system is loaned up and that any open-market purchase by the Fed directly increases reserves in the banks. If the required reserve ratio is 0.2, by how much could the money supply expand if the Fed purchased $2 billion worth of bonds?
I need both the answer and explanation with sources to read deeper about the topic.
Posted Date: